2010 ACI-NA Airport Concessions Benchmarking Survey

Phoenix, AZNovember 8, 2010

Presented by Rebecca Ramsey, Chair, Concessions Benchmarking

Working Group

Outline

Survey Methodology

Concession Planning

Concession Agreements

Concession Marketing

Concession Financial Performance

Concession Management

Concluding Remarks

Survey Methodology Goal: to build a comprehensive database of key

industry measures for benchmarking with peer airports

Survey questionnaire in three parts:Part 1: General InformationPart 2: Food & Beverage (F&B)Part 3: News, Gift & Specialty Retail (NG&SR)

Designed by the ACI-NA Concessions Benchmarking Working Group in February - June, 2010, launched in July to all ACI-NA airport members, data collected in July - September online using Surveymonkey tool, last response received on Oct.8

Survey Sample

2009 Survey Respondents

2010 Survey Respondents

Number of Airports in US by Hub

Size

% of Airports

ParticipatingPart 1 Part 2 Part 3

Large 20 18 18 18 29 62%Medium 21 21 20 20 36 56%

Small 13 11 9 10 71 14%Non-hub 4 3 3 3 226 1%

Canadian & Bermuda

9 8 6 6 -- --

Total 67 61 56 57Note: 2009 Survey is for News, Gift & Specialty Retail only.

Passenger Demographic Information

95% of airports have made efforts to collect passenger demographic information.

42% of airports have updated passenger data since 2008.

The median age of passengers is 44.

The median household income is $88,000, significantly higher than the national median of $49,777.

Concession Planning

58 out of 65 respondents use RFPs to solicit & award contracts

54% of airports require minimum staffing levels in concession agreement

74% of airports define & control product lines sold

Competition in Concessions

Percent of Responses

Food & Beverage

News, Gift & Specialty Retail

Have competing concessionaires 64% 52%

Have multiple concessionaires within the same terminal/concourse

59% 41%

Food & Beverage Rent Calculation

5%

44%

16%

28%

7%

1. A fixed amount (e.g.MAG)

2. % of gross sales

3. Both (1+2)

4. Greater of Both (1 or 2)

5. Other

Median Percentage of Gross Sales = 13%

News, Gift & Specialty Retail Rent Calculation

7%

35%

19%

31%

8%

1. A fixed amount (e.g.MAG)

2. % of gross sales

3. Both (1+2)

4. Greater of Both (1 or 2)

5. Other

Median Percentage of Gross Sales News & Gift = 15% Specialty Retail = 13%

Concession Contract Length

The median length of the contracts for Food & Beverage and News & Gift is 10 years.

The most common length of contracts is 10 years.

Specialty Retail has a relatively shorter term:

- median = 7 years

- most airports have 5-year term.

Management of Food & Beverage Programs

Food & Beverage Branding

Carts/Kiosks ProgramFood & Beverage News, Gift & Specialty

Retail

Presence at the airport 41% Yes 53% Yes

Status 59% Permanent 18% Temporary 23% Both

47% Permanent 13% Temporary 40% Both

Management Most common practice is for Master Concessionaire/Prime Operator to operate as part

of its shop operations

MAG vs. % rent 11% Percentage Rent 89% Both MAG & %

28% Percentage Rent 72% Both MAG & %

Concession Marketing

42% of respondents have a marketing program

34% of respondents collect a marketing fee

72%

14%14%

A fixed amount

% of gross sales to the airport

Other

How is the marketing fee calculated?

Concession Marketing Top 5 items that airports

spend marketing funds on:

Brochures In terminal advertising Print advertising Shopper service

trainingCustomer service

training

What Does Your Airport Contribute to the Marketing of

the concession program?

Rent as a Percent of Gross Sales

Median Percentage

Food & Beverage

News, Gift & Specialty Retail

Overall 12.7% 15.7%

Large 14.3% 16.6%

Medium 12.9% 15.7%

Small 10.9% 14.3%

Non-Hub 12.8% 10.4%

Canadian 9.5% 23.0%

Median Gross Sales per Enplanement

Food & Beverage

News, Gift & Specialty Retail

Overall $4.00 $2.72

Large $5.21 $3.24

Medium $4.43 $2.66

Small $3.11 $2.01

Non-Hub $2.23 $1.26

Canadian $6.12 $4.19

Median Total rent per Square Foot

Food & Beverage

News, Gift & Specialty Retail

Overall $88.94 $130.51

Large $148.67 $158.09

Medium $89.60 $115.15

Small $30.20 $78.70

Non-Hub $13.99 $26.56

Canadian $91.83 $184.81

Top 5 Formal Concession Monitoring Programs

1. Approving changes in service hours

2. Conducting periodic price surveys

3. Conducting facility inspections

4. Conducting routine meetings with

concessionaires

5. Business statistics reports

Pricing Methodologies

Operational/Performance Audits 63 out of 65 respondents perform operational/ performance audits 86% of respondents conduct audits in house

Top 3 audits conducted in house:Approve changes in

service hours (61)Conduct facility

inspections (57)Business statistics

reports (55)

Top outsourced audits:Mystery shoppers (27)Conduct periodic price

surveys (8)Conduct facility

inspections (5)

Customer Satisfaction/Monitoring Programs

80% of respondents have customer satisfaction/ monitoring programs

Top 3 programs conducted in house: Customer comment

cards (38) Customer satisfaction

surveys (21) Provide customer

service training (15)

Top 3 outsourced programs: Mystery shoppers (27) Customer satisfaction

surveys (27) Provide customer

service training (12)

Staff Dedicated to Concession Management

Factors affecting staffing level

Airport size and hub status

Management methodology

Number of contracts

Monitoring requirements

Closing Remarks

Use survey data with caution

Choose your peers for comparison based on a

number of factors such as airports size, hub status,

and geographical location

When making decisions consider your local

situation as well as what is going on nationally

DefinitionsAirport Brand/Non Brand - A generic brand relative only to the airport.

Developer - airport has agreement with a third party to develop/lease and manage the concessions without operating any directly. Developer invests in facilities directly.

Direct leasing - Airport leases individual locations or small groups of locations (no more than 3) directly with the operators.

Fast Food/Quick Service - Food is served at counters or is pre-prepared for "grab and go." Food may be quickly prepared to order, and may be branded or non-branded.

Fee Manager - airport has agreement with a third party to develop/lease and manage the concessions without operating any directly. Fee manager does not invest in facilities.

Local/Regional Brand - A brand that is developed, distributed and promoted within a defined geographical area, usually found in more than one metropolitan market that appeals to, is recognized by, and meets the specific and unique needs of the population of a particular locale or region. It may be recognized as a national brand also.

Master concessionaire - Airport leases all food service concessions to a single operator, who may or may not also operate retail. The Master Concessionaire may sublease some of the locations to other operators.

National/International Brand - A brand that is marketed and distributed nationally/internationally.

News/Gift (also referred to as Convenience Retail, Newsstand or Sundries Retail) - A type of Concessions Operation that specializes in the sale of magazines, newspapers and other periodicals, candy, gum, snacks, sundries, magazines, paperback books and souvenirs. Some news/gift stores may sell hardcover books as part of its product mix, but such books are not the primary item offered. Single-serve canned or bottled drinks may also be sold at such locations.

Prime operator - Airport leases packages of locations to two or more operators, each of which has multiple locations (more than 3) within the airport.

Sit Down/Casual/Bar - Typified by table service, although there may be carry-away or "grab and go" components. Food is prepared to order and restaurants of this type often include a bar. Examples include TGIFridays, Carabbas, Outback, Max & Ermas, Chili's, etc.

Specialty Coffee - These venues focus on coffee & may offer other beverages as well along with pastries, bakery items or other light food. The venue may have take away items such as sandwiches & bottled beverages. Includes Starbucks, Seattle’s Best, Peet’s Coffee or a local specialty coffee concept.

Specialty Retail - A type of Concessions Operations that specializes in the sale of a particular category of consumer products such as clothing, sporting goods, electronics, travel accessories, books, leather goods and luggage, souvenirs, lotions and personal care items, and home accessories. Automated retail of good that would generally be sold in specialty retail shops may also be included in this category; may be individual locations or small "stores-within-a-store" that are accounted for separately from the larger location. Stand-alone bookstores should be included as specialty retail.

Total Rent - Consideration received by the airport for the right to operate at your airport, not including fees paid for parking, security badging, deliveries, marketing, etc.